A concern that labor shortages will drive up pay and trigger inflation might be unwarranted. A survey of more than 1,500 mid- to large-size employers by William M. Mercer Inc. suggests that raises in 1999 will again be between 3.9% and 4.4% for the second straight year.
"Employers appear resolved to holding the line on fixed compensation costs," says Steven E. Gross, a Mercer compensation consultant in Philadelphia. "Instead of ratcheting up base pay, manufacturing and service companies are adopting new -- or fine-tuning -- incentive programs so as to distinguish outstanding employee achievement from average performance."
Gross says 48% of those surveyed have increased the number of employees who are eligible for incentives since 1995.